Wash Sale Question

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movingabroad
Posts: 9
Joined: Wed Jul 08, 2015 8:14 am

Wash Sale Question

Post by movingabroad » Fri Mar 17, 2017 10:32 am

Hello guys,

It's my first time dealing with this situation, so I have a question. I recently sold (3/8) a few of my VTI shares in my brokerage account. I wasn't thinking about the dividend reinvestments occurring this month. :oops: I also have VTSMX and VTSAX in my Solo 401k and Roth IRA accounts with dividends reinvested that will trigger a wash sale as well. Can I just change the settings for each of these and have the dividends sent to my settlement fund to fix this situation, or is it too late now?

Also, what happens if these dividends are reinvested. Is it a major or minor problem? The shares I sold in my brokerage resulted in a realized loss of only $6 and some change.

Thanks for your help.

movingabroad
Posts: 9
Joined: Wed Jul 08, 2015 8:14 am

Re: Wash Sale Question

Post by movingabroad » Fri Mar 17, 2017 11:50 am

Actually, it looks like I can't even change the setting in my Solo 401k account. When I try to do so, it says "pick a vanguard fund" and there are none listed. Hmm. Not sure what to do now. Looks like I can't avoid the wash sale.

livesoft
Posts: 55514
Joined: Thu Mar 01, 2007 8:00 pm

Re: Wash Sale Question

Post by livesoft » Fri Mar 17, 2017 12:24 pm

In your Roth IRA, a purchase of VTSMX/VTSAX/VTI before 4/8 (or so) will make your 3/8 sale at a loss a wash sale and disallow the loss. You have to decide if the less than $7 loss is important to you or not. A wash sale is not illegal and is easily reported on your tax return next year. I showed how to do that in another thread.

But you could sell all your VTSAX and VTSMX in your Roth IRA before the distribution and buy something else like VLCAX/VV. :) I think you could turn off automatic reinvestment of distributions, too. If you cannot do it from the web interface, then I suggest you make a phone call.
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movingabroad
Posts: 9
Joined: Wed Jul 08, 2015 8:14 am

Re: Wash Sale Question

Post by movingabroad » Fri Mar 17, 2017 12:31 pm

Thanks livesoft.

I turned off the automatic dividend reinvestments in the Roth IRA and Taxable account. What about the solo 401k? Does a wash sale pertain to any dividends being reinvested in that? It's not really a big deal to me for TLH. The reason I sold in the first place was just to change funds. $7 means nothing. I just don't want there to be any complications with my Roth IRA or Solo 401k.

Thanks again.

movingabroad
Posts: 9
Joined: Wed Jul 08, 2015 8:14 am

Re: Wash Sale Question

Post by movingabroad » Sun Mar 19, 2017 10:47 am

Anybody have an answer to the Solo 401k with dividends reinvested question? Does that cause a wash sale?

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Earl Lemongrab
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Joined: Tue Jun 10, 2014 1:14 am

Re: Wash Sale Question

Post by Earl Lemongrab » Mon Mar 20, 2017 12:23 am

movingabroad wrote:Anybody have an answer to the Solo 401k with dividends reinvested question? Does that cause a wash sale?

IRS regulations do not mention 401(k)s period. Only IRAs. You now know exactly as much as anyone else here.
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